* Dec qtr shipments 19.6 mln tonnes vs 14.8 mln yr ago
* Fortescue boosting output to annual 155 mln tonnes by end
* Short list of potential buyers for port, rail stake due in
By James Regan
SYDNEY, Jan 24 Fortescue Metals Group,
the world's fourth-largest iron ore miner, lifted shipments by
32 percent in the December quarter from a year ago, nearly all
bound for Chinese steel mills.
Australian miners, led by Rio Tinto and BHP
Billiton , are ramping up production of the
steel-making ingredient, banking on their lower-cost operations
to see them through any softening in demand growth from Asian
Fortescue's shipments climbed to 19.6 million tonnes in the
three months to Dec. 31, 2012, from 14.8 million in the
corresponding period a year ago, the company said, meeting
Fortescue said it expected volatile market conditions in
China to stabilize in the near term.
"Steel mills are readjusting their raw material stocks to
maintain more sustainable stock levels. With China's new
leadership starting to rejuvenate programmes of economic growth
and urbanization, steel demand is expected to increase and
support iron ore prices," the company said in a statement.
Fortescue, which carries around $12 billion in long-term
debt, last month reinstated expansion work on its Kings deposit
after deferring it earlier in the year when iron ore prices halved to less than $90 a tonne.
A recovery to nearly twice that price in recent weeks led
the company to restart the project, which will add 40 million
tonnes a year to Fortescue's overall yield and enable it to
reach its 155-million-tonne target.
"The scale benefit of adding these low cost tonnes is
expected to significantly reduce Fortescue's overall cost of
production," the company said.
In the final month of 2012, the company was producing at the
annualized rate of just over 100 million tonnes.
Fortescue, which sells its ore at a roughly 12 percent
discount to the benchmark spot price said its cash mining costs
rose to an average $50.48 per tonne in the December quarter from
$46.35 in the same period a year ago as higher cost inventories
flowed through and the Australian dollar held strong.
Fortescue shares slipped 0.5 percent, underperforming a
slight rise in the broader index.
Earlier this week, BHP, the world's biggest mining company,
boosted its iron ore output by 3 percent in the December
quarter, while Rio Tinto recorded a 6 percent
Fortescue Managing Director Nev Power told a media
conference call the company expected to have a short-list in
four to five weeks of potential bidders for rail and
infrastructure assets it is trying to sell.
Plans to sell a minority stake in its port and rail unit
could provide the crucial link for at least four companies
planning to start or expand production -- Atlas Iron,
Brockman Mining, BC Iron and Flinders Mines
Fortescue's rail line is considered its prized asset as it
is the only iron ore railway built in Western Australia to
challenge the stranglehold of the iron ore giants in Western
Australia, Rio Tinto and BHP Billiton, which have not allowed
other miners to use their rail lines.
Australia's No.3 iron ore miner could raise as much as $5
billion for a 49 percent stake, analysts estimate, but it would
depend on how a deal is structured and what rate another owner
could charge Fortescue and others to access the rail and port
servicing the iron-rich Pilbara area.
Fortescue closed 0.64 percent lower at A$4.63,
underperforming a firmer broader market.